Power Charges

All the charges involved in the purchase of electric service are popularly called "power charges." However, of the total payment made to the power utility, only a small portion is actually a function of rate of change of energy. The monthly power bill actually includes the cost of fuel, the fixed charges on the equipment theoretically reserved for the customer, and other costs of operation, in addition to the profit for the utility stockholders and for the retirement of bonds.

When a prospective passenger purchases a railroad ticket, he pays a simple price which includes the cost of the foregoing items, but he does not know how his money is to be divided among them. Similarly, when a customer pays for electric service in his home, he seldom knows even approximately how his money is allocated among the many items which make up the cost of that service. The expense involved in analyzing the cost for every customer would be prohibitive. In the bill presented to the domestic user, energy only is mentioned. The other items of cost are said to be "hidden" However, the size of most industrial installations and the monthly energy bill involved justify the expense of periodic or continuous analyses of the various items of cost in the billings, and they are charged for individually.